Nestle slips 3%; Maggi case hearing on July 2
Sources tell ET Now that Barabanki court has issued notice to Nestle in Maggi case and the hearing on the case is on July 2, 2015.
By ET Online |
MUMBAI: Shares of Nestle India closed the day at Rs 6,671.85, down 2.70%. The stock slipped over 3% in intraday trade on Monday.
Sources tell ET Now that Barabanki court has issued notice to Nestle in Maggi case and the hearing on the case is on July 2, 2015.
Uttar Pradesh Food Safety & Drug Administration (UP FSDA) registered a case against the company on Saturday on "dangerous levels of lead in noodles brand Maggi".
The UP FSDA found lead content in Maggi to be seven times more than the permissible level in a routine test of two dozen noodle packets.
Reports of finding of excessive lead and monosodium glutamate in Maggi samples surfaced in mid-May.
However, it has failed to have any significant impact on the stock price.
According to the report, UPFSDA officials are ‘shocked’ to find such life-threatening high levels of lead in Maggi. If found guilty, the company may be penalised with a court-determined fine and jail term of at least three years for senior executives.
Taking cues from UPFSDA, now Uttarakhand has picked up Maggi samples to check if it contains more than permissible limits of lead and monosodium glutamate (MSG).
The Uttarakhand food safety department collected samples from Nestle’s Pantnagar plant and other cities, including Dehradun.
The Maggi brand of products — which includes noodles, sauces, soups and cooking aids — accounts for nearly one-third of the company's total revenues. It is Nestle's only segment where volumes grew for the year 2014.
As per Nielsen data, the company has already lost 704 bps of market share in the chocolate category over last two years. Any negative impact on noodles business due to the lead controversy could pull down the stock price sharply lower.
Goldman Sachs has maintained a ‘Sell’ on the stock post Q1 results with a target price of Rs 5,131.
According to analysts, the recent event could hurt the brand, but Nestle India would tide over the challenge — if past experience and industry track record are any indication.
Jagdish Malkani, member of BSE & NSE, in an interview to ET Now, said: "The stock is unlikely to face sharp selling pressure. For bargain hunters, it is great stock to buy."
Sources tell ET Now that Barabanki court has issued notice to Nestle in Maggi case and the hearing on the case is on July 2, 2015.
Uttar Pradesh Food Safety & Drug Administration (UP FSDA) registered a case against the company on Saturday on "dangerous levels of lead in noodles brand Maggi".
The UP FSDA found lead content in Maggi to be seven times more than the permissible level in a routine test of two dozen noodle packets.
Reports of finding of excessive lead and monosodium glutamate in Maggi samples surfaced in mid-May.
However, it has failed to have any significant impact on the stock price.
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According to the report, UPFSDA officials are ‘shocked’ to find such life-threatening high levels of lead in Maggi. If found guilty, the company may be penalised with a court-determined fine and jail term of at least three years for senior executives.
Taking cues from UPFSDA, now Uttarakhand has picked up Maggi samples to check if it contains more than permissible limits of lead and monosodium glutamate (MSG).
The Uttarakhand food safety department collected samples from Nestle’s Pantnagar plant and other cities, including Dehradun.
The Maggi brand of products — which includes noodles, sauces, soups and cooking aids — accounts for nearly one-third of the company's total revenues. It is Nestle's only segment where volumes grew for the year 2014.
ADVERTISEMENT
As per Nielsen data, the company has already lost 704 bps of market share in the chocolate category over last two years. Any negative impact on noodles business due to the lead controversy could pull down the stock price sharply lower.
Goldman Sachs has maintained a ‘Sell’ on the stock post Q1 results with a target price of Rs 5,131.
ADVERTISEMENT
According to analysts, the recent event could hurt the brand, but Nestle India would tide over the challenge — if past experience and industry track record are any indication.
Jagdish Malkani, member of BSE & NSE, in an interview to ET Now, said: "The stock is unlikely to face sharp selling pressure. For bargain hunters, it is great stock to buy."
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